Strapped States Raising Taxes on Employers

Critics say it's going to make joblessness worse

By Harry Kimball, Newser Staff

Posted Jan 20, 2010 4:22 PM CST

(Newser) – Massive unemployment is putting a strain on state benefit funds, and states in turn are trying to recoup the money by raising taxes on employers. In all, 36 states have raised payroll taxes, a strategy that critics say will backfire by putting a crimp on hiring. “Everything’s going up, and business is going down,” one Virginia employer tells USA Today. In that state, taxes have gone up from $95 per employee in 2009 to $171 in 2010.

The increases range from a few dollars in some states to nearly $1,000 per worker in Hawaii. "We don't want to pick this moment of all moments to boost taxes on employers," says an economist at the Brookings Institution. "We want to encourage employers as much as possible to add to their payrolls." Times are tough, however: Twenty-five states have borrowed a total of $25 billion from the federal government to keep up with jobless benefits, and another nine will be in the red by mid-year, reports ProPublica.

[Images (2)]

[Quotes (1)]

Graphic shows historical and estimated number of people who exhausted unemployment benefits

Things are tough for employers and the unemployed alike. (Shutterstock)

« Prev« Prev | Next »Next » Slideshow

We don't want to pick this moment of all moments to boost taxes on employers. We want to encourage employers as much as possible to add to their payrolls. - Gary Burtless, Brookings Institution

« Prev« Prev | Next »Next » Slideshow

CLICK BELOW TO VOTE

12%

60%

16%

To report an error on this story, notify our editors.

More Newser Stories

Jobless Claims Hit 9-Month High

Reach 500K mark as employers again cut back

(AP) - New applications for unemployment insurance reached the half-million mark last week for the first time since November, a sign that employers are likely cutting jobs again as the economy slows. The Labor Department said today that initial claims for jobless benefits rose by 12,000 last week to 500,000, the fourth increase in the past five weeks. Wall Street economists forecast that claims would drop. More»

House Extends Jobless Benefits

Measure now goes to President Obama for his signature

(AP) - Congress has approved legislation to restore unemployment insurance to people who have been out of work for six months or more, ending a seven-week interruption that caused 2.5 million people to lose benefits averaging about $300 a week. The 272-152 House vote sends the measure to President Obama, who has promised to immediately sign it. More»

Temp Hiring Is on the Rise

Employers show confidence, but hedged with caution

(NEWSER) - With the economy on an upswing, employers are feeling a tad more confident—enough to bring on more temporary workers, who can easily be let go if things go south again. Temp hiring has risen for 4 months—longer than the aftermath of previous recessions, when employers started hiring permanent workers after just 2 or 3 months, the New York Times reports. More»

Unemployment Now Lasts Longer Than Benefits

(NEWSER) - A rough milestone on the jobless front: The average length of time it takes to find a job—26.2 weeks—now exceeds the standard length of unemployment benefits—26 weeks. That's first time it's happened since the Labor Department began keeping stats 60 years ago, reports Bloomberg. The bit of good news for job-seekers is that Congress has temporarily extended benefits up to 59 weeks in hard-hit states and is working on another extension. More»

Strapped States Fall Behind on Unemployment Checks

(NEWSER) - Years of tax and budget cuts have left the nation's unemployment system badly weakened just as it's most needed, the New York Times reports. At least a million applications are still stuck in the system and many applicants have to wait months for their first check. Sixteen states have exhausted their reserves and are now using borrowed money to pay unemployment checks. Many more are expected to join them before the year is out. More»

NEWS FROM OUR PARTNERS

What is Newser?

Face it: there's too much news. At Newser, we choose the most thought-provoking and entertaining stories from hundreds of US and international sources and reduce them to a headline, picture, and two paragraphs. And we do it 24/7—you can come back morning, noon, night (and in between) for something new that matters. Read less, know more.

Learn more »

Partnering with: Slate

View Newser on the mobile website

Strapped States Raising Taxes on Employers